Duped and Betrayed
by Paul Krugman

According to The New Republic, Senator Zell Miller — one of a dwindling band of Democrats who still think they can make deals with the Bush administration and its allies — got shafted in the recent tax bill. He supported the bill in part because it contained his personal contribution: a measure requiring chief executives to take personal responsibility for corporate tax declarations. But when the bill emerged from conference, his measure had been stripped out.

Will "moderates" — the people formerly known as "conservatives" — ever learn? Today's "conservatives" — the people formerly known as the "radical right" — don't think of a deal as a deal; they think of it as an opportunity to pull yet another bait and switch.

Let's look at the betrayals involved in this latest tax cut.

Most media attention has focused on the child tax credit that wasn't. As in 2001, the administration softened the profile of a tax cut mainly aimed at the wealthy by including a credit for families with children. But at the last minute, a change in wording deprived 12 million children of some or all of that tax credit. "There are a lot of things that are more important than that," declared Tom DeLay, the House majority leader. (Maybe he was thinking of the "Hummer deduction," which stayed in the bill: business owners may now deduct up to $100,000 for the cost of a vehicle, as long as it weighs at least 6,000 pounds.)

Less attention has been paid to fine print that reveals the supposed rationale for the dividend tax cut as a smoke screen. The problem, we were told, is that profits are taxed twice: once when they are earned, a second time when they are paid out as dividends. But as any tax expert will tell you, the corporate tax law is full of loopholes; many profitable corporations pay little or no taxes.
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